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FirstNet Reiterates Defense of Spectrum Lease Agreements

The First Responder Network Authority (FirstNet) plans to reiterate at a House hearing tomorrow its defense of spectrum manager lease agreements (SMLAs) in the wake of criticism from states and others concerning their terms, including termination penalties, spectrum lease fees, and charges for failing to meet subscriber milestones. But a New Hampshire official will blast the SMLAs and ask Congress “to hold FirstNet accountable” and ensure the states have “a fair pathway” to make an opt-out decision.

“The SMLA is a binding agreement between the opt-out state and FirstNet establishing the terms and conditions for the state’s use of the Band 14 public safety spectrum. The agreement reflects the requirements of the Act, standard telecommunications industry regulations, the NPSBN’s [National Public Safety Broadband Network’s]critical role in supporting public safety communications, and the significant responsibilities involved with deploying a wireless broadband network for public safety,” FirstNet Chief Executive Officer Mike Poth said in written testimony prepared for the hearing tomorrow before the House communications and technology subcommittee that will focus on state perspectives on FirstNet.

“In short, the SMLA sets forth requirements associated with the state building, operating, maintaining, and improving its own RAN [radio access network], including the state’s financial obligations to the federal government. These requirements are intended to ensure the ongoing operation of an interoperable, secure, and sustainable network that meets the needs of public safety across the nation, and they are similar to the requirements that FirstNet will deliver to opt-in states,” said Mr. Poth, echoing points made by FirstNet in a new “FirstNet Facts” web page unveiled last week (TR Daily, Oct. 27).

Mr. Poth also stressed the challenges that opt-out states will face.

“Opt out states will assume all technical, operational, and financial risks and responsibilities related to building, operating, maintaining, and improving their own RAN for the next 25 years,” he said. “Given the statutorily mandated processes, it is possible a state pursuing opt out will be at least two years behind states that opt in.”

In his written testimony, Chris Sambar, senior vice president-FirstNet for AT&T, Inc., which is FirstNet’s network partner, said that “FirstNet and AT&T are committed to continual engagement and consultation with the states and territories to help explain what FirstNet means to their stakeholders and to help ensure that it delivers what the public safety community in each state and territory needs.”

Mr. Sambar noted that 25 states and two territories have opted in so far. “Many cited low-risk, expanded coverage, increased network capacity, and/or immediate access to mission-critical capabilities as key reasons for their early opt-in decision,” he said. “In fact, three of these states (Michigan, Arizona and Alabama) decided to opt in after evaluating proposals from competing vendors. Even with that additional information and due diligence, states still opt in, confirming that the FirstNet AT&T State Plans deliver the best network and services public safety needs and deserves.”

Another witness at tomorrow’s hearing is John Stevens, the statewide interoperability coordinator and FirstNet state point of contact for New Hampshire.

New Hampshire Gov. Chris Sununu (R.) wrote governors last week asking them to hold off opting in to the FirstNet system to help press for information from federal officials on penalties and fees that states and territories could be liable for if they opt out (TR Daily, Oct. 25).

The governor recently signed an executive order establishing a committee to review the “regulatory and financial risks” to the state if it seeks to opt out of having AT&T build its RAN (TR Daily, Oct. 16). Mr. Sununu said the “fees and penalties appear to be arbitrary and primarily designed to deter states from opting out of FirstNet plans.”

In his written testimony for the hearing, Mr. Stevens urged “this Committee to hold FirstNet accountable and take steps to ensure that FirstNet provides a full explanation of the numbers it has released, complies with the intent of the law, and provides a fair pathway for each state to make its opt-in/opt-out decision free of undue duress.”

The committee that will review an opt-out decision for New Hampshire, which contracted with Rivada Networks LLC to prepare an alternative plan, will primarily focus on “the following: 1) to ascertain from FirstNet and NTIA the necessary procedural requirements and achieve a full understanding of the regulatory agreements that must be in place for a state to construct its own network; 2) to understand the justification for what appear to be arbitrary and capricious fees and penalties provided for in the draft SMLA; and 3) to fully understand the feasibility, sustainability, and the financial obligations necessary to fully operate, empower, and enhance the FirstNet network in New Hampshire for the next twenty-five (25) years,” Mr. Stevens said.

“We are confident that, as a result of the process we have engaged in for the last two years, New Hampshire is now in receipt of an alternative FirstNet Plan that will address coverage on a statewide basis and will also deliver to our first responders a network that will be at little or no cost to the subscriber,” he added. “Isn’t that the very reason why the law was established and FirstNet was created, to provide the tools that will allow first responders to communicate in times of emergency? Unfortunately, states are now being threatened with outrageous and indefensible penalties that deter states from even considering an opt-out decision. It honestly makes one believe that the SMLA is fraught with fictitious and erroneous figures only to apply pressure on states to opt-in.”

Mr. Stevens said that “New Hampshire has been advised, through the SMLA, of a termination penalty, ranging from $10,609,059-$608,568,423, that will be imposed if for some reason the designed network should fail. Other states have been advised that their termination penalty payments will be in the billions and billions of dollars. Can we honestly expect that states could assume such risk, when all they are trying to do is represent their first responders by providing the best possible coverage? And if the penalty was to be assessed, where does that money go? To AT&T? These figures are absurd, and they are accompanied by spectrum payments in the tens of millions of dollars, adoption disincentive payments, adoption payment levels at 5 years, and adoption payment levels at 20 years. What are we promoting here, public safety and the ability to provide better service to our citizens, or lining the pockets of corporate America?

“We have a FirstNet alternative plan that we have great confidence in. If the plan passes the hurdles presented by the FCC, NTIA, and FirstNet, why then should we be subject to any penalty and why would FirstNet not want to work with the State to make the opt-out plan successful?” he asked. “We seem to have lost the meaning of why FirstNet was created in the first place. Corporate America (i.e. the AT&Ts, the Verizons, and major cell phone companies) were approached years ago and asked to provide public safety with priority preemption in cases of extreme emergencies. They declined. Now that FirstNet has been created, AT&T and Verizon (who only recently has jumped in to vie for the same business) say that their interest is in serving public safety. There is no better determiner of States needs then the States themselves, and who can better represent public safety than public safety?”

Meanwhile, Verizon Communications, Inc., in a letter today the subcommittee today ahead of tomorrow’s hearing, said that while it “understands FirstNet’s decision to select a single network partner, we also recognize that FirstNet has a statutory mandate to ensure that states have a meaningful opportunity to make their own communications decisions including the ability to construct their own networks should they not wish to use the network built and operated by FirstNet and its commercial partner. These ‘opt-out’ provisions allow states to use the spectrum and federal funding provided to FirstNet by Congress to support the deployment and operation of state-based networks should they choose to opt-out of the FirstNet network.”

“Critical to the viability of such an option is the ability for a state to use its own core network, or one deployed by its preferred commercial partner,” Verizon added. “States should not be required to use the core network deployed by FirstNet and its commercial partner, as such a requirement would have several negative implications. … Verizon believes it is important for Congress or NTIA to make clear that the law permits a state wishing to opt-out to have its own core network, as such a finding is imperative to a state having a viable means to opt-out.”

Meanwhile, Rivada, which lost out to AT&T for the FirstNet contract, today posted responses on firstnetoptions.com, a website it is funding, to points that FirstNet made on its “FirstNet Facts” page last week.

Among other things, the posting said that states can buy more time to consider their options by opting out and then opting back in if they choose. It also said states have no way to hold FirstNet and AT&T accountable to deliver on what is promised in state plans. And it said that the law that created FirstNet does not require states to sign SMLAs with FirstNet. And it said that the law doesn’t “authorize FirstNet to levy spectrum lease fees, termination fees or minimum subscription penalties on States or prohibit their operation of in-state cores” and it asked why SMLAs are confidential. —Paul Kirby, paul.kirby@wolterskluwer.com